There is a place for S'pore start-ups in vibrant Chinese tech ecosystem, says IE Singapore divisional director

As tech giants like Google can attest, China is a brutal place for global start-ups, but it could be promising for eager Singapore companies, said IE Singapore.

The trade agency believes local start-ups should not be deterred by the fact that many companies have failed in China and take a more strategic approach instead.

China has a huge market and a vibrant tech ecosystem but competition is hot and failure rates are high. Global companies have struggled to navigate the different business culture and adapt their solutions to meet the market's needs.

Many have bowed out, among them Google and Facebook.

But Ms Lim Ai Leng, IE Singapore divisional director for East China, said there is a place for Singapore tech start-ups there.

"Singapore companies should look to be connected to China's vibrant ecosystem and to carve out a niche, instead of trying to conquer it," she noted.

They can consider cities that are relatively more mature and advanced in their tech ecosystems, such as Beijing, Shanghai, Suzhou and Shenzhen.

Ms Lim said: "Beijing has the third largest ecosystem in the world; Shanghai is a cosmopolitan city, which makes it easy for international investors to navigate. Suzhou makes a... familiar environment for Singapore start-ups due to the presence of the NUS (Suzhou) Research Institute, and Shenzhen is strong in hardware innovation."

She said Singapore companies must first decide between using China as an end-market and as a collaboration partner. China's large population makes it a compelling end-market; start-ups can scale up once they have a suitable product.

With China as a partner, Singapore companies can co-create or adopt solutions for overseas expansion, particularly in South-east Asia.

"Many Chinese enterprises and start-ups are internationalising," said Ms Lim. "Singapore's familiarity and connections with South-east Asia, as well as its strengths in the English language and intellectual property, are value propositions."

Second, Singapore companies must build an understanding of local market needs and habits then identify a strong value proposition that is required and cannot be easily copied.

Ms Lim noted: "This is especially so for consumer-centric products, as Chinese start-ups will know the local market best. Singapore start-ups might have a greater edge in (business-to-business) solutions."

Third, they must find a partner to swiftly grow the business. Rather than aim to build a "perfect" product, companies should trial products quickly to build the market and improve them along the way, she said.

"Speed-to-market is critical. China's product development is quick for two main reasons. First, the consumer's speed in adopting new services is high. Second, companies in China are quick to adapt their products to suit the market."